Today the International Energy Agency (IEA) released their Oil Market Report. While the report is only available for subscribers for the first 2 weeks following the release, reports are already emerging on some of the contents:
LONDON (Reuters) – The International Energy Agency on Tuesday sharply reduced its forecast for oil demand growth through the rest of 2007 and into 2008 saying oil’s march towards $100 was already slowing consumption.
The adviser to 26 industrialised consumer nations cut its prediction for fourth quarter demand growth by 570,000 barrels per day (bpd) and by 180,000 bpd in the first quarter of 2008.
That will cut the need for OPEC crude by up to 700,000 bpd in the fourth quarter of this year and up to 300,000 bpd in the first three months of next year, the Paris-based agency said in its monthly Oil Market Report.
“…the recent dramatic price rise is having a ‘short-term’ shock effect, at the same time as consumers appear to be adapting behaviour to deal with steady annual price increases,” the report said.
The IEA had already made deep downward revisions to its demand forecast in its October report. In total, the IEA has slashed projected fourth quarter demand growth by nearly 900,000 bpd and cut growth in the first quarter by more than 200,000 bpd.
The major significance there is that the dire warnings of OECD inventories falling to critical levels were based on the IEA’s earlier forecasts. Those projections of critically low inventories (and those projections have been wrong all year long) have helped drive oil prices higher. I haven’t seen any reports of revisions to the IEA’s inventory projections, but the slashed demand should signicantly increase future projected inventory levels. In short, the emergency that many have projected in the near term will be delayed by this latest IEA report.